Estate taxes made up for revenue drop

Despite the economic downturn that affected city revenues on several fronts, a surge in estate tax revenues and some internal reorganization brought Upper Arlington unexpected benefits in 2009.

Despite the economic downturn that affected city revenues on several fronts, a surge in estate tax revenues and some internal reorganization brought Upper Arlington unexpected benefits in 2009.

Finance director Catherine Armstrong reported the news to Upper Arlington City Council during its Jan. 19 work session.

"The economy was the big news," Armstrong said. "Income tax was down, the local government fund was down, the amount of investment revenue was down because interest rates were so low."

Of the city's $29-million annual general fund budget, income tax collections were down from initial projections by more than $1.3-million, from $12.4-million to $11.1-million.

However, this loss was more than made up by a significant deviation in estate tax revenues. Armstrong said that collections were not due to any one wealthy member of the community leaving a large estate, but rather the accumulation of many estates.

"We brought in a significant amount of estate tax that made up for the revenue that we lost," Armstrong said. "That was unexpected and unanticipated, and of course unbudgeted."

Original budgeted estate tax collections were projected at $2.1-million, but actual collections were more than twice that figure, at $4.8-million, a difference of nearly $3-million. During the previous four years, the city had averaged about $3-million in estate tax collections.

Because the national and state economy has been in significant turmoil since the fall of 2008, council also closely watched expenditures in anticipation of expected reductions in income tax collections. That caution resulted in more than $1.8-million in savings, Armstrong reported.

"We lapsed about 6 percent of our appropriations," she said. "We watched very closely during the year, trying to not spend dollars unless we had to spend them."

Armstrong also credited public services director Darryl Hughes with significant reductions in his departments.

The changes in public services saved more than $250,000 of a $1-million budget, or more than 25 percent of operations, and the streets division, which also reports to Hughes, saved more than 11 percent of its approximately $400,000 budget.

During its abbreviated Jan. 25 regular meeting, council gave the first reading to an amendment of the city's sex offender law to change an erroneous felony provision to a misdemeanor.

Council President Frank Ciotola indicated he was reluctant to make the change.

"We have to change that failure to register to a misdemeanor," Ciotola said. "Do we really have no choice on that?"

City attorney Jeanine Hummer said the city has no felony authority, but said the state law would still impose the more severe penalty for some conduct.

"The state requirements stays the same," Hummer said. "That is a felony.

"Upper Arlington had its own internal registration process. When we made an additional requirement, when we did that we initially made it a misdemeanor. When the state law changed, in the midst of many changes in that (sex offender) law, that was erroneously changed to a felony. We can't confer felonious jurisdiction on what is controlled by the state. We can't as a city make a penalty we don't have control over."

Hummer said the advantage of having local requirements that parallel the state law is that it gives the city its own prosecutorial discretion for cases where the county prosecutors might decide not to pursue a matter.

"We have some control," Hummer said. "Part of the reasoning is to have our prosecutorial authority have a hand in this process. Allowing it to be a misdemeanor allows that to happen."

Failure to make the change could invalidate the city's law altogether, Hummer said.

"What we don't want to have happen is for someone to not register in UA, we realize it, then someone says, you don't have jurisdiction over a felony," she said.

The Upper Arlington code is more restrictive than state law in some aspects, Hummer said, citing the example of restrictions on the sex offender's place of employment, in addition to residence.

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